How to Budget for Home Maintenance Costs
Some first-time homeowners are shocked to learn that the cost of homeownership doesn't stop at the closing table. Here's how to plan for unexpected surprises.After shelling out thousands of dollars for a down payment, mortgage fees and other closing costs, some first-time homeowners are shocked to see that the cost of homeownership doesn't stop there.
Unlike renters, homeowners have a vested interest in maintaining the property, so it's important to plan for annual checkups as well as unexpected surprises, like a broken appliance or leaky roof. Find out what maintenance tasks you'll need to perform each year.
Try these tips for creating a home maintenance budget:
- Build a reserve. Set aside 1 percent to 3 percent of your home's purchase price each year in a separate savings account specifically for home maintenance and repairs. For example, if your home cost $300,000, set aside at least $3,000 each year. Make one large deposit or spread the amount out in monthly deposits.
- Assess your needs. Prioritize projects and work within your budget. Increase your budget as needed for bigger projects. For instance, if you know the furnace needs to be replaced, get an estimate and start saving for it.
- Conserve energy. Minimize gas and electricity costs by using energy-efficient appliances and light bulbs.
- Do it yourself. Depending on your level of comfort with a hammer and drill, consider doing minor repairs around the home yourself.
- Use credit wisely. Cut expenses and save money first. Avoid opening new credit cards or getting a home equity loan to fund major remodeling projects.